The USD/CAD pair initially tried to rally during the course of the day on Friday, but as you can see we fell back down and formed a shooting star. I don’t necessarily look at this is a selling opportunity, even though the shooting star is a negative candle. With that, it appears that the market could pullback from here, but I don’t think that there is much in the way of downside at this point. With that in mind, I have no real reason to sell this market as I think the 1.0875 level will be supportive. We could continue to bounce around in this general vicinity, as the consolidation continues and perhaps the market tries to pick up enough momentum to go higher.
Looking at this chart, the 1.10 level is by far the most important area for me. I believe that area will be the site of a massive breakout as soon as we close above there, and with that I would be very bullish and would be in the “buy and hold” camp at that point.
Looking at this chart, I see several opportunities.
I believe that pullbacks will continue to offer buying opportunities until we close well below the trend line that you can see at the bottom of the chart. The market has been going higher for several months now, and as a result it’s likely that the market should continue to go higher given enough time. On top of that, the US Dollar Index has broken out to the upside, meaning that the world essentially feels very comfortable with the US Dollar.
If we can get above the 1.10 level, something that I do think is going to happen given enough time, I believe that the first area that we would aim for is the 1.12 handle, and then the 1.15 level given enough time be on that. This pair tends to go sideways for long periods of time though, and as a result you will have to be patient if you are going to be get involved in this market. However, I believe that if you find a supportive candle below, or the breakout mentioned previously, it’s a good trade to take to the upside.